SIR ROBIN AULD:
Introduction
1. North Somerset Council (“the Council”) is one of many local housing authorities in the country, driven by central governmental financial restraints on public housing expenditure in recent years, to consider, among other options, large scale voluntary transfers (“LSVTs) of their housing stock to registered social landlords (“RSLs”) in order to facilitate improvements in standards and conditions of the properties within RSLs’ fund-raising powers, but not within those allowed to local housing authorities. The LSVT scheme, which is governed by (among other provisions) sections 32 and 43 of, and Schedule 3A to, the Housing Act 1985, requires consultation with affected secure tenants Paragraph 3 of the Schedule requires written notice to the affected tenants of “such details of … (the) proposal as … (the authority) consider(s) appropriate”, “the likely consequences of the disposal for the tenant …”, and the effect of the proposal on the tenant’s statutory right to buy, if any. Paragraph 5 of the Schedule provides that any proposed transfer is subject to the consent of the Secretary of State, which he cannot give if it appears to him that the majority of the affected tenants oppose it. For practical purposes the usual medium for taking the views of tenants – though not statutorily required as such – is by way of a secret ballot
2. The central issue in this case is whether the Council, in resolving on 26th June 2007, with the majority approval of the affected tenants voting in a ballot and the consent of the Secretary of State, to effect a large scale voluntary transfer of its housing stock to an RSL, North Somerset Housing Ltd (“NSH”), breached a legitimate expectation of the claimant, Mrs Pat Bath, one of the affected tenants, as to how it would use the net capital proceeds of the transfer, upon which she claims to have relied in voting in favour of the transfer.
3. Mrs Bath relies in the main upon a consultation document issued by the Council in about November 2004, prior to seeking the approval of the tenants. Consistently with earlier and later publicly available documents, the consultation document stated that the Council would apply the net proceeds of the transfer to capital housing projects. At that time the Council expected the net proceeds to be between E6 and £8m, but did not identify that or any other estimated range of figures in the document.
4. Just over a year later, in January 2006, the Council, following consultation with and balloting the tenants on the transfer, was advised by its property valuers of a dramatic rise in the estimated figure to £19.5m (later rising further to over £22m). Shortly afterwards, in February 2006, after obtaining ministerial consent, it effected the transfer to NSH. In doing so, it reaffirmed its stated intention in the consultation process to use the net capital receipt from the transaction for housing. Sixteen months later, in June 2007, the Council decided to allocate £8.m of that sum to housing projects and the balance to other areas of its responsibility.
5. Mrs Bath, by this claim for judicial review of the Council’s June 2007 decision, complains that the Council, in not allocating the whole of the net capital receipt from the transfer to housing, breached a legitimate expectation created in the consultation upon which she had relied when later voting in the ballot in favour of the transfer. By these proceedings she seeks a declaration that the Council is bound to spend all the net capital receipt on housing – in effect a mandatory order to that end. Alternatively, she seeks a quashing of the Council’s June 2007 decision coupled with an order to it to reconsider the decision.
6. The Council resists the claim. Broadly stated, its stance is that:
1) its stated intent in the consultation document to spend the net capital proceeds of the proposed transfer on housing was just that – a statement of general intent or policy – not a commitment to spend any sum of money capable of creating an expectation on which Mrs Bath or anyone else could legitimately rely; or
2) the statement, if creating a legitimate expectation of some sort on the part of Mrs Bath, cannot entitle her to relief since the June 2007 decision was lawfully made having regard to a legitimate aim pursued in the public interest; or
3) the statement, if capable of amounting to a commitment capable of engendering a legitimate expectation, would have been confined to a sum not exceeding £8m, the upper limit of the range of its expectation at the time of the consultation, from which it has not departed in its June 2007 decision.
7. The difference between the two positions turns on a balance – which it is for the Court to make – on the one hand, of the importance of holding a public authority to a • commitment, if given clearly and without qualification, to those with an interest in its fulfilment, and, on the other, the public interest of good administration that public bodies should not be fettered in their determination of their responsibilities to the community for which they are responsible.
The facts
8. The history of the matter, which is relatively straightforward and mostly undisputed, is as follows,
9. In 2003 the Council’s Executive began to consider a possible LSVT to NSH of a large part of its housing stock, with a view principally to securing for that stock necessary refurbishment, maintenance and services that it could not itself afford to provide. On 18th November 2003 the Council approved decisions of its Executive: 1) to consult affected tenants on such a project; and 2) to invest “(t)he net usable capital receipt from the transfer” “in capital projects to address the housing needs of North
10. In about November 2004 the Council issued a consultation document on the project – the main plank on which Mrs Bath’s claim rests, or, as Mr David Watkinson, on her behalf, put it in argument “the heart of her case”. The document set out a list of nine major advantages to tenants if they voted for the transfer. The most important of these was the facility it would provide for major repairs and improvements to their homes, which would be achieved by enabling NSH to secure funds to spend an additional £42m, not available to the Council for such work. At the end of the list the document included the following statement:
“The Council has agreed that the money the Council receives from transfer after paying transfer costs would be spent on capital projects to address the housing needs of
11. At about the same time and over the turn of the year to 2005, the Council, as part of the consultation process, issued a number of other publications to its tenants to like effect. In a booklet entitled “Questions and Answers on Housing Transfer” under the heading of “What are the main benefits of transfer”, it made no mention of capital receipts. And, under the heading “How much money would the Council get for the housing transfer”, it stated “The precise figures are not known yet … The Council has pledged to use the remainder to address the housing needs of
12. Further, in an “Open Door” newsletter to tenants in January 2005 explaining how NSH would be able to spend far more than the Council on major repairs and improvements over the following 30 years, the Council stated, under the heading ‘New Homes”:
“The Council has agreed that the money it receives from the transfer after paying off transfer costs would be spent on capital projects to address the housing needs of
The Council would look to use available money from the transfer to help social landlords provide new affordable housing in the area. North Somerset Housing would be involved in this process and it would hope to receive funds from other places too.”
13. The report to the Council of the consultation process showed, under the heading “Written Responses from tenants”, that, whether or not they favoured transfer, they were, in the main, concerned about the standard of repairs and services they would receive, not with the spending by the Council of any net usable capital receipt.
14. On 1st March 2005, following the consultation and a newly commissioned report from professional valuers, the Council’s Executive, in a report to the Council continued to show an estimated figure of net capital receipts from the transfer of 9.6-8 million. The Council decided to put the proposal to its tenants for their consideration by way of secret ballot and, in doing so, confirmed by resolution that:
“(8)… the net capital receipt be used as a contribution to meeting the affordable housing needs of the area and housing related assets.
(9),.. the Council consider it is a high priority to meet affordable housing needs annually from 2006-07 and thereafter by
(a) appraising specific proposals to meet the affordable housing needs of the area compared against other capital investment priorities of the Council …”
15. In the ballot in early April 2005, of the 66.2% of tenants who voted, some 75% were in favour of the proposed transfer, that is, about 50% of the affected tenants balloted. Encouraged by that outcome, the Council’s Executive decided to continue with the project and to negotiate the transfer to NSH, subject to final approval by the Council and obtaining ministerial and other necessary statutory consents.
16. In November 2005 the Council received a further professional valuation of the stock it proposed to transfer, estimating for the first time a net capital receipt figure of £19.5m – that is, more than double the highest figure previously in play. Very shortly afterwards that estimate was itself further revised to £21.5m. The Council sought counsel’s advice, as to how it should treat the receipt now estimated. Counsel advised that the new figure “… potentially … (raised) significant public interest issues as to how the increased portion should be spent” and that the Council should “consider use of the increased portion of the capital receipt, as not to do so and to only consider itself bound by the consultation document would be open to challenge”. That advice was of a piece with current guidance – albeit in lamentable government-speak – from the Office of the Deputy Prime Minister (“ODPM”) stating his expectation to see “proposals for any usable receipt that help deliver the authority’s contribution towards the sustainable community agenda locally”.
17. At a meeting of the Council on 17th January 2006 the Council resolved to transfer the housing stock to NSH, and reaffirmed its decision of 1st March 2005 as to the application of the net capital receipt, further resolving that it would use it in accord with the following principles:
(a) to ensure a significant improvement in affordable housing provision to address general housing need and special schemes for vulnerable groups,
(b) to ensure all development in accordance with principles of sustainability and community regeneration, including the provision of supporting infrastructure, and
(c) to maximise affordable housing provision through (section) 106 agreements and the generation of external funding from the Housing Corporation, English Partnerships, HomesWest and any other appropriate sources”. (my italics)
It should be noted from the words I have italicised in paragraph (a) of that resolution that the Council’s commitment was to use the recently revised estimated transfer capital receipt “to ensure a significant improvement in affordable housing provision”, not that it should be solely committed to that purpose. In the result, as Mr Philip Hall, the Council’s Director of Finance and Resources, observed at paragraphs 53 and 54 of his witness statement, the resolution, in permitting, the receipt to be used for a range of projects outside housing, accorded with the ODPM guidance of the day.
18. The Council’s decision required the consent of the Secretary of State under section 32 of the 1985 Act, which he gave, and, on 6th February 2006, the Council effected the transfer. The transfer contained no clause limiting the use to which the capital receipt could be put, but it did contain a clause acknowledging the Council’s intention to work with NSH and other RSLs “to meet, as far as it is able, the housing needs of
19. At a meeting of the Council’s Executive on 11th July 2006, it proposed as priorities for use of the net capital receipt – still anticipated to be about £21.5m – expenditure of about £12.5m on affordable housing by 2012 and the balance to be allocated for wider infrastructure projects, a budgetary proposal to which it adhered in a meeting on 13th February 2007.
20. On 26th June 2007, following local elections in which the Conservatives on the Council secured political control of it from a Labour/Liberal Democrat alliance, the Council revisited its 17th January 2006 resolution as to the use to which the net capital receipt of the transfer would be put. A report for the meeting prepared by the new Leader of the Council proposed amendments to the Council’s revenue and capital budget for 2007/2008 as “a first stage of bringing the budget into line with the priorities of the new administration”, in particular, a perceived need to increase investment in highways. And, in paragraph 3.3, the report set out the relevant terms of the Council’s decisions of 1st March 2005 and 17th January 2006 before stating:
“It is now proposed that the sum of the original projection (£8m) is ringfenced in accordance with resolution COU179 of March 2005, in line with the commitment given by the Council in the stock transfer consultation process.”
The Council, having considered that report, resolved to rescind its decision of 17th January 2006:
“… in order to provide more flexibility in the application of the housing stock transfer receipt to fund Improvements across all Council priorities;
and re-affirmed its resolution of 1st March 2005:
“in respect of a sum of £8m with a balance of the housing stock receipt to be allocated according to the Council’s general priorities in due course”.
21. Pausing in the narrative at this point – and as Mr Hall commented, at paragraphs 63 – 65 of his witness statement – neither the Council’s consultation document nor any of its resolutions had committed the Council to spending all of the net capital receipts on housing. The 26th June 2007 resolution formally ear-marked for the first time £8m of it for meeting the affordable housing needs of the area and related needs, previously simply mentioned as one of three priorities in the 17th January 2006 resolution, and widened the ambit of other capital projects on which the receipt could be spent.
22. The net usable capital receipt at the date of transfer is now estimated at about £22.9m, £8m of which the Council, in accordance with its resolution of 26th June 2007, will allocate to housing, and the remainder it has yet to allocate – leaving open whether it will allocate some of the remainder to housing.
The Issues
23. The issues for the Court in outline are whether:
1) the Council gave a clear and unqualified commitment to Mrs Bath upon which she can found a legitimate expectation that all the net capital receipt – whatever it amounted to – would be applied to housing needs;
2) if so, whether the Council’s decision of 26th June 2007 is unlawful as a departure from that expectation and because the departure is unjustified; and
3) if so, to what relief, if any, she is entitled?
Submissions
24. Mr David Watkinson, for Mrs Bath, submitted that the representation in the consultation documentation was clear and unqualified, namely that all of the net capital receipt, whatever it amounted to, would be applied to housing. He added that the Council had never imposed any monetary limitation on what was known throughout to be an uncertain figure. If, before its June 2007 decision, it considered capping the ultimate figure of net receipt, it should have done so expressly and prominently.
25. He maintained that Mrs Bath, whether or not she or any of the affected tenants had suffered or would suffer any detriment from the Council’s June 2007 decision, was entitled to expect the Council to comply with that representation. It was a commitment to a discrete group of persons of which she was one, namely the affected tenants, as to what the Council would do. Alternatively, he argued that the Council, in reaching that decision, erred in law in disregarding its representation in the consultation documentation, and that it was for it to justify its non-compliance.
26. As to relief, Mr Watkinson made plain that Mrs Bath’s claim is in the first instance for substantive, not procedural, relief, namely a declaration that the Council is bound to spend the whole of the net capital receipt on housing – effectively a claim for mandatory relief to that effect. Alternatively, he suggested the Court should grant procedural relief by quashing the Council’s June 2007 decision and directing it to reconsider the matter. However, when pressed by the Court, Mr Watkinson indicated that he envisaged such an alternative to be only a thinly veiled form of substantive relief, accepting that, on Ms Bath’s case as put, the only legal reconsideration open to the Council would be to spend the whole sum on housing.
27. Mr Christopher Baker, for the Council, maintained that there was no clear and/or unqualified representation here that could have legitimately founded the expectation alleged. More particularly, he submitted that neither the 2003 decision nor the consultation document amounted to a representation to anyone that all or any specific amount of the net capital receipt – whatever it turned out to be – would be used only on meeting housing needs. At best, it was a general proposal, contingent on changing financial priorities of the Council as and when it sought to respond to legislative, economic, social and political change – not an appropriate case for intervention by the court.
28. Mr Baker submitted, by way of an alternative on this first issue, that, at worst for the Council, the commitment, if commitment there was, could only have related to use of net capital receipt to the extent of SO -8m referred to in the various reports and working group papers in 2004 generally available. He emphasised that that range of figures was still in play at the time of the consultation document, which, as I have indicated, did not mention any particular figure. On that premise, the Council’s proposal in June 2007 decision to allocate £8m of the net capital receipt to housing could not amount to a departure from any expectation that Mrs Bath might legitimately have had.
29. In the further alternative, Mr Baker submitted that, if the Council departed from a commitment to spend the whole of the net capital receipt on housing, there was no evidence of detrimental reliance upon such commitment by Mrs Bath so as to render the change unfair to her or other Council tenants in, say, persuading them to vote for rather than against it in the April 2005 ballot. Nor, on a proper balance of all the material factors, he submitted, was there any unfairness or other unlawfulness in the form of abuse of power or otherwise in its June 2007 decision. On the contrary, it was plain long before the 2003 decision to embark on the transfer process, in the consultation at the turn of 2004/2005 and at the ballot in April 2005, that a powerful, albeit not the only, reason in favour of the transfer was the additional E42m that the Council would secure for repairs and services to the tenants’ homes. Looking at the position at the time of the June 2007 decision, he also relied on the evidence before the Court of the Council’s success in meeting housing needs in its area and of a significant increase non-housing demands on the Council’s resources. In short, he submitted that there was no unfairness here capable of shilling the balance in favour of whatever expectation Mrs Bath may have had and against the Council.
30. As to relief, Mr Baker, no doubt with his submission in mind on the balance, if any, to be drawn between Mrs Bath’s claim of breach of legitimate expectation and the public interest in sound public administration, reserved any arguments that he might need to advance on the mandatory nature of the substantive relief sought by Mrs Bath.
Conclusions
Issue 1– whether the Council gave a clear and unqualified commitment to Mrs Bath and/or other tenants affected by the transfer proposal upon which she can found a legitimate expectation that all the net capital receipt – whatever it amounted to – would be applied to housing needs
31. In my view, the whole of Ms Bath’s claim must fail on this first issue. The law normally requires a legitimate expectation to be founded on a clear and unqualified representation to the claimant and/or to those for whom he or she may be taken as speaking, as a foundation for showing that departure from it by the maker is so unfair as to amount to an abuse of power; see the observations of Bingham LJ and Judge J, as they then were, in R v IRC ex p MFK Underwriting Ltd (1990) 1 WLR 1545, QBD, at 1570A-B and 1575A respectively, affirmed by Sir Anthony Clarke MR, giving the judgment of the Court in Begum v Returning Officer for London Borough of Tower Hamlets (2006) EWCA Civ 733, at para 44, and of Peter Gibson LJ in Rowland v Environment Agency (2005) Ch 1, CA, at para 68(1), citing Simon Brown LJ, as he then was, in R v Inland Revenue Commissioners, ex p Unilever plc (1996) STC, 681, at 693-695.
32. There was no such clear and unqualified commitment here in the consultation documentation to the Council’s affected tenants generally, on which Mr Watkinson rested the whole of Ms Bath’s case, or otherwise. As Mr Baker submitted, neither the Council’s decision of 18th November 2003 to embark on the transfer process nor the 2004/2005 consultation documentation amounted to a clear or firm representation to anyone that all, or indeed any, of the anticipated net capital receipt would be spent on housing. Neither mentioned any specific amount estimated or contemplated as likely to become available. The proposal described in the consultation documentation to apply the net capital receipt to housing was part of a wider and general project for transfer of housing stock, subject to completion of the various stages and contingencies that the statutory process involved.
33. In addition, given the Council’s responsibility to plan and budget so as to enable it to respond appropriately to varying priorities as and when they arose over the whole range of its responsibilities, it was inherent in the very nature of the proposal that its detailed implementation might be subject to change – as proved to be the case. Apart from anything else, as Mr Baker observed, the implementation of any spending proposal that might be extracted from The consultation documentation would inevitably be affected by future spending and revenue raising decisions of the Council over the whole range of its activities.
Issue 2 – if the Council’s consultation documentation was sufficient to create a legitimate expectation on which Ms Bath were entitled to rely, whether the Council’s decision of 26th June 2007 would be unlawful as a departure from that expectation and because the departure is unjustified
34. The challenge of Ms Bath on this issue is based both on overlapping principles of unfairness amounting to abuse of power in departing from a representation and/or of failure to have regard or proper regard to that representation. However the complaint is capable of classification in law, the answer in the circumstances of any particular case should, in common sense, be the same. The Court of Appeal in recent years have pronounced on this issue in various ways, but out of the varying terminology employed, a consensus appear to have emerged, at least at that appellate level, that the proper approach in a claim based on legitimate expectation of a substantive benefit is: 1) whether departure from a representation giving rise to that expectation is so unfair to the person or persons to whom it was made as to amount to an abuse of power; and 2) to weigh the unfairness against any overriding public interest relied upon for departure from the representation: see R v North and East Devon Health Authority, ex p Coughlan (1999) 2 WLR 622, CA, per Lord Woolf MR, giving the judgment of the Court, at 645D-E.
35. Such unfairness is normally manifested in the form of detriment to the holder of the legitimate expectation, but not always; see per Gibson LJ R v Secretary of State for Education and Employment, ex p Begbie (1999) 1 WLR 1115, CA, at 1124A-G, with whom Laws and Sedley LJJ broadly agreed. However, as Gibson Li added in the same passage, citing de Smith, Woolf & Jowell, Judicial Review of Administrative Action, 5th ed. (1995) p 574, para 13-030 , it is very much the exception for a court to find unfairness in the absence of detriment.
36. Mr Watkinson suggested, albeit softly, that there is evidence of some detriment here in Ms Bath’s assertion in her evidence that her grandchildren or other affected tenants’ relatives who might need public housing in the future may be prejudiced by the Council’s June 2007 decision not to spend the whole £22m odd on housing. However, he frankly acknowledged that neither she nor they have personally suffered any detriment from it. Nor is there any basis for his suggestion that the Court could identify some detriment by assuming that the tenants who voted in the ballot in favour of the transfer would have voted against it but for the claimed representation. It is plain from the documentation to which I have referred earlier in this judgment that the main driver for the proposed transfer, and no doubt a powerful incentive to those tenants to vote in favour of it, was to enable NSH to do what the Council was unable to do, spend an additional £42m on much needed improvements to their homes and housing support services.
37. It follows, in my view, that if there was any unfairness in this case, it is not to be found in any detriment to Ms Bath or other tenants affected by the transfer.
38. However, as Mr Watkinson submitted, there is still the important principle, now well established by Coughlan, at 650 A-B and 653A-B, Rowland, at paras 68 and 79, and Nadarajah Abdi v Secretary of State for the Home Department (2005) EWCA Civ 1363, at para 69, and other authorities that, where a public authority has, by its representations and/or conduct, given rise to a legitimate expectation to a discrete body of persons, it should not lightly be allowed to depart from it. Here, he submitted: 1) that the Council’s representations, if such as to create a legitimate expectation, amounted to an important commitment to which it should be held – one made to a discrete group of persons, namely affected public housing tenants; and 2) that the burden is on the Council to justify its non-compliance.
39. It is clearly an important and beneficial principle of public law that public authorities should be held to a clear and unqualified commitment given to a person or group of persons who have relied upon it. But, where issue is joined between the importance of public bodies behaving fairly – particularly where there is no evidence of detriment in the form of reliance – and the interests of sound public administration in not fettering their discretion and judgement as to what is required in the public interest, it is probably now unhelpful to place the persuasive burden on one or other side in making a value judgement on the issue. It is, as Peter Gibson LJ put it in Rowland, at para 79, following the guidance of the Court in Coughlan at 653A-B, for a court to ask itself whether a change of tack affecting a claimant who has been led to expect something different is “a just exercise of power”.
40. It is also plain in the light of the authorities that, in making that enquiry, a court must also have regard to considerations of proportionality, both as to whether, in the circumstances, the interest of an individual claimant or group of claimants should override that of the general public and of good administration, and whether to give primacy to the public interest would be amount to “overkill”. In short, a public body responsible for statements of policy or of proposals or representations as to its future conduct affecting a wide range of interests may change such statements of intent if and when the public interest requires it, if it does so without unfairness to the claimant and does so proportionately. See per Laws LJ in ex p Begbie at 1130E-1131C (cited with approval by Sir Anthony Clark MR in Begum, at para (44), and per Laws LJ in Nadarajah v Secretary of Tate for the Home Department, (2005) EWCA Civ 1363, at paras 68 and 69:
“68. … a public body’s promise or practice as to future conduct may only be denied, and … may only be departed from, in circumstances where to do so is the public body’s legal duty, or is otherwise … a proportionate response (of which the court is the judge …) having regard to a legitimate aim pursued by the public body in the public interest. The principle that good administration requires public authorities to be held to their promises would be undermined if the law did not insist that any failure or refusal to comply is objectively justified as a proportionate measure in the circumstances.
69. … Proportionality will be judged … by the respective force of the competing interests arising in the case. Thus where the representation relied on amounts to an unambiguous promise; where there is detrimental reliance; where the promise is made to an individual or specific group; these are instances where denial of the expectation is likely to be harder to justify as a proportionate measure. … On the other hand where the government decision-maker is concerned to raise wide-ranging or ‘macro-political’ issues of policy, the expectation’s enforcement in the courts will encounter a steeper climb.”
41. In my view, in that state of the law, Mr Baker rightly submitted that, if there had been any departure from any legitimate expectation that Mrs Bath might have had, it would not, in the circumstances, have been an abuse of power or otherwise unfair. In terms of the Council’s responsibility for the good local governance of
42. For the sake of completeness, I should add that Ms Bath could not succeed under the banner of an error of judgment by the Council in failing, as claimed by her, to have regard, or sufficient regard, to its proposal in the consultation for spending the net capital receipt on housing, because it has clearly decided to do just that. As I have mentioned in paragraph 19 of this judgment, the report to the Council for its meeting on 26th June 2007 specifically referred, in paragraph 3.3, to that as a commitment, and set out the relevant terms of the Council’s decisions of 1st March 2005 and 17th January 2006.
43. In the light of my rulings on the two main issues raised by this claim, it is unnecessary for me to say anything on the issue of relief. However, I cannot avoid commenting on the difficulty that would have been posed for the court in even contemplating mandatory relief of the highly prescriptive sort sought by Mrs Bath in the exercise by a local authority of its responsibility for allocation of its resources in the best interests, as it sees it, of the community for which it is responsible.
44. For all those reasons, I dismiss the claim.
